Local energy transitions as process: How contract management problems stymie a city's sustainable transition to renewable energy

Abstract

The existing literature on energy transitions mostly explains factors that affect whether a national government decides to make an energy transition to renewable energy. Less attention has been paid to how governments implement the policy to meet renewable energy targets and the challenges that arise after policy adoption. Specifically, the current literature misses the importance of contracting failures as one type of risk management that is important in local energy transitions. Therefore, we incorporate concepts from the contract risk management literature to explain local energy transitions. This article presents findings from an in-depth case study aimed at building theory about local energy transitions. It explains how Georgetown, Texas implemented its energy transition policy and the contract management challenges it experienced during implementation, which resulted in a significant electric fund shortfall. Our results extend the theory of local energy transition by incorporating contracting design and failures, processes to manage contracting risks, and feedback loops in the process of local renewable energy transitions. The results suggest that contract and risk management are integral components of the energy transition process. The article concludes with practical implications for local governments in managing financial risks in renewable energy contracts during energy transitions.